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Senate rejects fee cap for anti-tobacco lawyers

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An effort to impose a $1,000-an-hour cap on legal fees for attorneys who sued tobacco companies failed in the Senate, leaving the lawyers free to collect billions in fees.

The Senate rejected by 50-45 on Thursday an amendment to the tobacco bill that would have limited the attorneys fees from tobacco company settlements.While senators tried to move ahead on legislation that would charge tobacco companies at least $516 billion over 25 years, in part by raising cigarette taxes by $1.10 a pack, House Speaker Newt Gingrich predicted the bill would fail in the House.

"It's dead here because we won't take it up. There is no chance, none," he told The Washington Times. He said GOP leaders in the Senate seem to have lost control of the bill. "They have what is now sort of a feeding frenzy," said Gingrich. "There's enough money (in the bill) that every politician is rushing for their own pet projects. It's wrong."

The Senate debate centered on attorneys once considered heroes for getting the tobacco industry to pay the medical bills of sick smokers. Suddenly, they find themselves labeled the bad guys and accused of greed.

Lester Brickman, a legal ethics professor at Cardozo Law School in New York, estimated that Texas attorneys put in more than 25,000 hours of work toward the $15.3 billion settlement to pay Medicaid costs. Their share comes to $2.3 billion - about $92,000 an hour.

The standard rules of ethics prohibit lawyers from charging more than a "reasonable fee," Brickman said.

"What is reasonable is in the eye of the beholder, but if there is any ethical requirement whatsoever, then surely these fees exceed the bound of reasonableness," Brickman said.

Many of the attorneys battling the tobacco companies actually did not charge their clients any specific hourly fee.

Gregory Joseph, chairman of the American Bar Association's litigation section, noted that such attorneys took on the tobacco companies on a contingency basis in which lawyers do not get paid unless they win, and then they get a percentage of the take.

"When these cases were undertaken, no plaintiff had ever recovered a dime, and they had shown absolutely zero willingness to settle," Joseph said. "Nobody ever contemplated that the recoveries would be as giant as they would be."



State investments

Minnesota, the beneficiary of a $6.1 billion settlement of its tobacco lawsuit, will stop investing pension money in companies that get more than 15 percent of their revenue from tobacco.

The state Board of Investment approved the policy 4-1 Thursday. The decision affects only a fraction of the $43.7 billion in pension funds the state has invested.

The resolution came from Secretary of State Joan Growe, who said tobacco stocks "have consistently lagged. They have consistently under-performed."